Degrees of Freedom
Skill credentials for workers without a college diploma
Higher education is America’s crown jewel — surely our single most successful, potent, and internationally competitive industry. No other sector attracts as much talent, generates as many ideas and technologies, and educates as many people. Although entrepreneurs and market competition played a role in creating this trillion-dollar industry, we built most of it with public money.
Federal spending built universities
Land grants seeded colleges in every US state, including the University of California, Michigan State, Penn, historically Black colleges, and Texas A&M. Each year, we invest billions of dollars in university-driven science, medicine, technology, and social sciences that fuel American innovation, economic growth, and global competitiveness. We give tax breaks to university donors and endowments and reduce capital costs by making campus construction bonds tax-exempt. These are supply subsidies.
We also subsidize demand. The GI Bill famously gave returning World War II vets tuition and stipends to attend college. Federal student aid in the form of Pell Grants, Loans, and Work-Study programs makes college more affordable for millions. The Higher Education Act of 1965 established comprehensive student aid programs, accreditation systems, and financial aid standards. Title IX banned sex discrimination; sixty percent of college graduates are now female. Federal spending supported university operations during the pandemic and provided almost $200 billion of student loan forgiveness. Investments in both supply and demand have made higher education more than 3% of our economy.
This spending heavily benefits the 40% of Americans who earn a four-year degree.1 The San Francisco Fed calculates that this privileged group earns 75% more than their non-college counterparts. We also enjoy better health, marriages, and life expectancy, although experts debate which way the causality runs.
We have never made a commitment like this to train the sixty percent of US workers who do not graduate from college. Even though more people might benefit, we spend about one hundred times less on career and technical education (CTE) than higher education. The US neglects the training of non-college workers far more than most countries. These comparisons are never perfect, but most developed countries spend about three times more training non-college workers than we do.
Why do we not invest as wisely in career and technical education as in four-year college degrees? One overlooked reason is that it has never produced skill credentials that are as universally accepted as a college degree. Our inability to certify occupational skills at scale makes investments in CTE harder to justify.
Skill credentials are a powerful social technology
Bachelor’s degrees originated in medieval Paris and England. By the mid-20th century, a four-year BA (or Bachelor of Science) degree had become the standard for undergraduate education in much of the Western world. After World War II, the GI Bill-driven expansion of higher education made college degrees more accessible and entrenched them as social benchmarks. Soon, medicine, law, engineering, teaching, etc., required a bachelor’s degree as the minimum qualification.
“Skills-Based Hiring”. Today, many jobs that previously required only experience or a high school diploma require a four-year college degree. A BA degree serves as an employment filter, and not only for white-collar occupations. In 2022, Burning Glass, an excellent labor market research firm, partnered with Harvard Business School to document the problem and announce “The Emerging Degree Reset”.
Both Republicans and Democrats urged employers to stop requiring four-year college degrees for so many jobs. The Republican governors of Maryland and Utah and the Democratic governor of Pennsylvania announced support for “skills-based hiring.” Presidential candidate Kamala Harris called on the federal government to open jobs to workers whose skills and experience came from community college, military service, and on-the-job training. Companies including IBM, Google, and Apple announced they would remove many strict degree requirements.
It made no difference. When Burning Glass followed up, they found that when companies dropped BA requirements, the share of workers without a BA grew by only 3.5 percent. Employers who stopped requiring college degrees still preferred to hire candidates that had one.
Credentials matter. We might have predicted this. Research suggests that credentialed skills—those formally recognized by degrees, certifications, or licenses—tend to be more valuable in the labor market than non-credentialed skills, even when the actual underlying competencies are similar. The power of credentials is due to their signaling, recognition, and portability—not necessarily greater ability or productivity.
Signaling. Employers use credentials as low-cost screening tools because they signal not only specific skills but the intelligence, discipline, and perseverance required to acquire them. Michael Spence won the Nobel Prize in 2001 for demonstrating how signals work in markets where both prospective employees and employers suffer from asymmetric information. Research suggests that workers who acquire strong skills informally and are not certified get fewer interviews, are less mobile across sectors and geography, and earn lower wages.
Recognition. Credentials only work if they are widely recognized. This is especially important among low-wage workers, where labor markets are so sticky that one Brookings study called them “sandpits”. They found that over 10 years, only 43 percent of workers in low-wage occupations leave low-wage work and that the chance of leaving drops in half every four years a worker stays in a low-wage job.
Credentials are plainly not the full solution to this problem, but they do matter. Workers without a good way to signal their skills or experiences are caught in a skills liquidity trap because employers cannot evaluate how well their skills might transfer to a new company.
Portability. The Atlantic recently offered a good example. Students at Bunker Hill Community College in Boston can earn an associate degree in cardiac sonography in two years. However, the credential means very little outside of Boston. Without a portable credential, workers lose mobility and leverage — and hospitals come to prefer sonography techs with BAs.
In contrast, a bachelor’s degree travels. It is recognized everywhere, so college graduates are far more likely to change cities for a new job than those who never attended college. (The concentration of good jobs in cities run by Democrats who refuse to build housing also affects these relocation decisions.)
Nationally Recognized Credentials for Noncollege Skills
The challenge of credentialing non-college skills is not new, and the landscape is crowded with efforts to address it. Companies and foundations have created microcredentials, sector credentials, and accreditation systems. Each has hit natural limits.
Microcredentials. Sometimes called “badges”, these are specialized certifications that recognize discrete skills. Examples include the software certifications offered by Cisco, Microsoft, Salesforce, and Google. edX’s MicroMasters or Udacity’s Nanodegrees offer micro-credentials that can be combined (stacked). On-demand modules like NOCTI, Coursera, and LinkedIn Learning offer self-paced courses that help people upskill in particular areas. Assessment-based certifications like the NEA microcredentials allow people do demonstrate competencies through assessments rather than course completion. Because employers cannot investigate the scope and quality of unfamiliar microcredentials, they treat them as complements, not substitutes, to a four-year degree.
Sector credentials. Without a standard “currency” that reflects a trusted signal like a BA degree does, microcredentials are simply not as valuable to non-college workers.2 One exception is the construction industry, which has worked hard to develop non-college skill certifications. The National Center for Construction Education and Research (NCCER) provides standardized training and widely accepted credentials for more than forty construction-related crafts.
Accreditation systems. Several private organizations accredit programs that offer non-college credentials. This is an excellent idea and one I propose we federalize. Private efforts have had limited success in getting nationwide traction.3
In reviewing three recent books on the need for supply-side housing and energy solutions, I chided the authors of Abundance for ignoring the need for supply-side education solutions. What was that about?
The three books I reviewed each pointed out that Democrats are more comfortable growing demand by paying for housing vouchers, community preservation, and mortgage interest deductions than building millions of new homes. In education, we see the same preference for demand-side solutions.
Ditching degree requirements in favor of skill-based hiring or hoping that microcredentials will substitute for BA degrees fits this long-standing progressive bias for subsidizing demand.4 Profit-allergic progressives prefer to expand Pell Grants, forgive student loans, and create more transparency around college outcomes than build effective training solutions that are deeply tied to business hiring.5
Virginia’s FastForward Program illustrates how demand-based training can work. With credentials and curricula closely tied to the state’s employers, it’s helped nearly 45,000 workers earn higher pay—around $4,000 more annually, on average. However, as commendable as Virginia’s efforts are, employers in Texas are not familiar enough with their credentials to base hiring decisions on them.
American Skill Credentials
This might change if Fast Forward could be accredited by a national system designed to make noncollege skills as legible to employers as a BA degree. Let’s call the system American Skill Credentials (ASC).6 ASC would engage employers, workers, and educators to provide a national quality accreditation to industry and regional credentials. By certifying the quality of disparate credentials, it would increase employer acceptance and uptake. A hospital in Arizona could confidently hire a cardiovascular tech trained in New York, and a factory in Ohio could trust a manufacturing process control certificate earned in Oregon. ASC would also make it easier for workers to accumulate skills acquired over time by stacking ASC-certified credentials that open the door to better jobs.
Increasing the mobility and earnings of non-college workers has bipartisan support, so Congress might create and fund an ASC system for high-demand careers in fields like advanced manufacturing or health care.
Only the federal government can catalyze common standards needed to create credentials recognized by tens of thousands of employers. ASC will not work as a top-down program, nor as a single-state program. The feds should convene and engage managers, workers, and educators like the Biden administration did with its CHIPS and clean energy initiatives. They invested at the federal level, waived many regulatory restrictions, and gave states and cities room to adapt to local needs.
ASC-certified training programs need to reflect local economic priorities, which means that ASC accreditation must push them to evolve continually (freezing skill requirements is the Achilles heel of skill certification). Despite local variations, American Skill Credential-certified programs would have several things in common.
Sector-specific. Most ASC programs need to be sector-specific. Information technology is a good example for BA-holders because employers value certifications in cybersecurity, network administration, and software development and pay workers more for them. We need to test non-college skill credentials in sectors like healthcare, construction, and manufacturing, where they can significantly enhance earnings. There is much about designing effective national credentials that each industry will need to discover by trial and error.
Deeply engaged companies. The best ASC programs will offer workers a mix of classroom teaching and on-the-job experience. These will often be internships or apprenticeships and classroom/online teaching and AI tutoring for younger workers. They will likely benefit from experienced mentors who can provide feedback, support, and guidance. Managers who are engaged to help create ASC programs will also promote them and their credibility and adoption within the industry.
Labor and professional associations. Unions and professional associations can contribute to the creation of skill credentials. Labor organizations can help recruit and provide entry points for individuals from a variety of socioeconomic and educational backgrounds. They can support apprentices who face educational or economic barriers as well as experienced workers who wish to certify skills acquired on the job. Worker organizations can help market ASC programs to enhance their members' earnings, employability, and mobility. They can play a key role in celebrating and acknowledging completed training.
Educators. ASC certifications need educators to help structure learning pathways with clearly defined competencies, milestones, and curriculum aligned closely with actual job roles. Senior educators and government representatives must accredit and periodically review all certificates with ASC designations. Educators can also introduce lessons from effective, large-scale training programs in other countries.7
Companies, educators, and labor organizations should all participate in creating ASC under one strict ground rule: The absence of a skill certificate may never be used to exclude a worker from holding a job. In other words, federal skill credentials are not occupational licenses, which now limit hiring in about 30% of US jobs. It’s a topic for a different post, but American Skill Credentials should replace occupational licenses wherever possible.8
TL; dr
College degrees, backed by centuries of institutional development and hundreds of billions in public funding, have become the default signal of competence in the labor market. They exclude most workers, which contributes to growing public questions about their quality, cost-effectiveness, and value.
Once we stop vandalizing our federal government, we need to invest in credible, portable credentials that document the skills of America’s non-college workers who cannot signal valuable skills convincingly to employers and end up stuck in a “skills liquidity trap.” Sector-specific American Skill Credentials - accreditation for stackable, portable skill certificates that are co-designed by employers, educators, and labor organizations can build a credible and scalable alternative to the college degree.
This requires institution-building, not just market nudges or financial aid (much less random vandalism designed to reduce America’s state capacity). Without it, the bachelor’s degree will remain the most trusted signal in the job market, adding needless friction to the effort of most Americans to secure better-paying work.
CODA
Dolores O'Riordan of Cranberries was one of Ireland’s finest popular singers. I miss her trademark yodling, keening, and nerd-rocking.
Another ten percent have two-year degrees. Four-year degree holders earn 40% more than holders of two-year degrees based on median earnings across all fields. Of course, associate degree programs in specialized fields can lead to higher earnings than some bachelor’s degrees.
Research by scholars at Northeastern and ANSI confirmed that most microcredential programs serve college grads looking to develop additional skills. Strada found that people without a college degree were less aware of microcredentials and less likely to pursue them and that few employers see them as a substitute for a bachelor’s degree.
The Institute for Credentialing Excellence (I.C.E.) accredits personnel certification programs across various professions. These folks have a branch that literally accredits the accreditors. The Accrediting Council for Continuing Education and Training (ACCET) is another independent accrediting agency. It accredits private, post-secondary educational institutions offering non-collegiate vocational and professional training programs. The American National Standards Institute (ANSI) oversees the creation and use of thousands of engineering norms and guidelines. They have a branch, ANAB, that accredits organizations that issue certifications, ensuring the credentials meet technical standards.
The Bipartisan Workforce Pell Act now in Congress pumps up demand by offering federal aid for short-term training programs.
Our limited apprenticeship programs are an important exception. In 2021, the US had over 25,000 active apprenticeship programs serving fewer than 10 apprentices each. Notwithstanding the acute shortage of skilled trades like plumbers, that’s not a program designed to scale.
We need non-degree credentials to be as legible to hiring managers as a BA degree. Did I consider calling them American Skill Standards (ASS) and inviting employers and candidates to “kick ASS”? Of course I did. But we need to evoke trust, simplicity, and recognition — and it needs to work everywhere. Could top-level skills be declared American Certified Experts (ACE)? If it promotes more adoption than eye-rolling, sure. Any system of national skill standards will require effective marketing, just as BA degrees did.
Successful examples include Germany’s Dual Apprenticeship Model, which combines classroom instruction with workplace training. Despite evidence that it has not kept up with technical advances in recent years (a nontrivial risk), many CTE educators regard it as a global benchmark for apprenticeship programs. Also, Switzerland’s Vocational Education and Training strongly emphasizes employer involvement, structured learning, and nationally recognized certifications. Finally, IBM’s New-Collar Apprenticeships align skill-building closely with real job requirements and offer pathways into tech careers without traditional degrees.
Occupational licenses restrict hiring in about 30% of US jobs, partly because the US makes unionization difficult. Some economists I respect have found that these licenses raise wages nearly as much as unionization. However, occupational licenses restrict hiring, and most research finds that they restrict worker mobility and earnings more than they contribute in pay. Conservatives hate occupational licensing (see here, here, and here), but that does not make licensing a good idea.